Calls from rivals for higher charges by Safaricom rejected

Proposals by Airtel and Telkom Kenya that could have seen Safaricom forced to charge its customers higher rates than its rival telecommunications providers have been rejected by consultants hired to assess competition in the sector.

Airtel and Plum Consulting (on behalf of Telkom Kenya) had separately written to the Ministry of ICT last year asking that Safaricom pays a higher fee for calls and texts completed on its rivals’ networks.

The fee, technically referred to as a mobile termination rate (MTR), has been set at Sh0.99 for calls and Sh0.05 for text messages since 2010. The MTR is paid whenever a customer calls or sends a message to a network other than her own and has implications on the costs that an operator passes on to subscribers.

The proposal for an asymmetrical MTR has been rejected by Analysys Mason on the grounds that Kenyan companies are already paying low fees relative to companies in other global markets. Asymmetric MTR, the firm writes, is meant to cushion new players in a market and this is not the case locally.

“In Kenya, even though Safaricom clearly has greater economies of scale than other mobile operators, these other operators have been in the market for a long time and should not be ‘rewarded’ for having smaller scale,” reads the draft report.